Question 1

Medicare is the most important health insurer in the U.S because it insures the most people, followed by employer sponsored private insurance, privately purchased health insurance, Medicaid and other federal insurance programs.

Accepted Answer

Medicare is most important because it sets procedure and standards which other insurers follow; however, it does not cover the most people.

Question 2

Medicaid is funded by a 1.45% tax on employers and a matching 1.45% tax on employees.

Accepted Answer

Medicare is funded by a combined 2.90% tax on wages.

Question 3

Small group coverage mitigates the problem of adverse selection for the nine percent of the population who purchase health insurance individually.

Accepted Answer

Covering large groups mitigates risk.

Question 4

High deductible plans increase consumer awareness of costs of medical care by forcing them to pay for expenses up to a deductible amount. The negative aspect of this is that employees may not like having to spend extra time gathering information about price differences between providers.

Accepted Answer

High deductible plans indeed increase consumer awareness of healthcare costs by requiring individuals to pay out-of-pocket for medical expenses up to a certain deductible. This can lead to increased time spent by consumers in researching and comparing prices between different healthcare providers, which some may find burdensome or undesirable.

Question 5

Health Savings Accounts may contribute to risk sharing problem as younger, healthier, better educated individuals tend to use the HSAs as savings accounts.

Accepted Answer

Health Savings Accounts (HSAs) can contribute to a risk-sharing problem because they are more attractive to younger, healthier, and better-educated individuals who are less likely to need immediate healthcare services. These individuals may use HSAs primarily as savings vehicles, potentially leaving a less healthy population in traditional health insurance plans, which can lead to higher premiums and increased risk for those plans.

Question 6

An important feature of health insurance companies' pricing policies is that in the long run, cyclical trends of overcharging and undercharging can be observed, with each cycle period lasting 1-3 years.

Accepted Answer

The underwriting cycle lasts 7 to 10 years.

Question 7

The public perception of either one of these two initiatives, and the willingness to vote for either initiative, would be exactly the same.

Accepted Answer

It is true that in either case it is the consumer who will end up paying for those benefits. However, people who would never vote to increase taxes will calmly vote to have government insist that every employer provide specified benefits.

Question 8

The effect of either one of these two initiatives on consumers' welfare would be exactly the same.

Accepted Answer

It is true that in either case it is the consumer who will end up paying for those benefits. However, the public will ultimately lose more in forgone wages due to a mandate than in taxes avoided.

Question 9

The preferred provider organizations (PPOs) are the most comprehensive type of managed care organizations, providing all care, including building their own hospitals, hiring their own doctors and implementing sophisticated electronic record keeping systems. Kaiser Permanente is an example.

Accepted Answer

A closed-panel health maintenance organization (HMO) is the type described here.

Question 10

A common criticism of HMOs, PPOs and other managed care organizations is that the sickest patients resist use of managed care because they are uncomfortable with the gatekeepers and managers involved in obtaining their health care.

Accepted Answer

Managed care organizations often require patients to go through gatekeepers or primary care physicians to access specialist services, which can be a barrier for the sickest patients who feel this restricts their ability to directly access the specialized care they believe they need. This system of managed care aims to control costs and ensure appropriate use of services, but can lead to dissatisfaction among patients with complex or severe health issues who perceive it as an obstacle to timely and direct care.

Question 11

Medicare provides government insurance to the poor, while Medicaid provides government insurance for the elderly.

Accepted Answer

Medicare is a federal program that provides health coverage if you are 65 or older or have a severe disability, no matter your income. Medicaid is a state and federal program that provides health coverage if you have a very low income.

Question 12

Which of the following statements about Medicare is false?

Accepted Answer

Part A premiums are not income-based; they are generally free for individuals or their spouses who have paid Medicare taxes for a sufficient number of years. Part B premiums, on the other hand, are income-based.

Question 13

The proportion of an insurance company's premium income spent on provision of treatments is called the

Accepted Answer

The medical loss ratio (MLR) is the proportion of insurance premiums that an insurance company spends on healthcare claims and activities to improve healthcare quality. This term accurately reflects the portion of premium income used for the provision of treatments.

Question 14

Managed care organizations

Accepted Answer

Managed care organizations, including health maintenance organizations (HMOs), preferred provider organizations (PPOs), and others, compete with each other primarily on the quality and cost of the services they provide. They do not exclude HMOs, PPOs, or any specific type of managed care model, and they are not typically run by the federal government, but rather by private companies or non-profit organizations.

Question 15

All of the following are examples of substituting cheaper forms of care for more expensive ones, except

Accepted Answer

Options A, B, C, and E all represent ways to reduce healthcare costs by choosing less expensive alternatives for treatment or care. However, recommending nursing home care instead of hip replacement surgery (D) does not fit this pattern as it does not necessarily represent a cheaper form of care but rather a different approach to managing a health condition that might not address the underlying issue directly.

Question 16

A physician graduates from medical school and must decide whether to take a job as a junior member of a large group practice or work for an HMO directly. For the physician, a positive aspect of working for the HMO is

Accepted Answer

A steady stream of patients and income is a positive aspect of working for an HMO, as it provides financial stability and consistent patient engagement.

Question 17

When it comes to attempts of managed care to control costs, cutting prices is one of the most popular methods. Which of the following is not among the valid explanations of the rationale behind this practice?

Accepted Answer

Price cuts in managed care typically aim to reduce the costs for the insurance companies or managed care organizations, not directly to put money into the pockets of patients. While patients may indirectly benefit from lower overall healthcare costs, the primary rationale behind price cuts is to reduce the expenses of the managed care organization, not to provide direct financial benefits to patients.

Question 18

You give birth to healthy twins. After two days in hospital, case control nurse reviews your records to determine if it is medically necessary for you to remain another day in hospital. This is an example of

Accepted Answer

Concurrent review refers to the process of evaluating the necessity and appropriateness of medical care while it is being delivered, typically to decide whether to extend a patient's hospital stay. In this scenario, the case control nurse is reviewing the records while the patient is still in the hospital to determine the medical necessity of an additional day's stay, which is a classic example of concurrent review.

Question 19

An actuarial assistant at your HMO presents graphs and charts of the number of colonoscopies performed per 1,000 patients by each doctor in the plan. This is an example of

Accepted Answer

This is an example of database profiling, where data (in this case, the number of colonoscopies performed per 1,000 patients by each doctor) is analyzed and used to identify patterns or trends. This can help in understanding healthcare practices and making decisions based on that data.

Question 20

Requiring patients to have psychological exams, echocardiograms, mammograms, and blood tests before undergoing bariatric surgery (an elective surgery which induces weight loss) is an example of

Accepted Answer

These tests are examples of pre-admission testing, which is done to ensure the patient is fit for surgery and to identify any potential risks or complications that could arise during or after the procedure.

Quiz 5: Insurance Contracts and Managed Care